BOE’s Weale Says U.K. May Have Less Spare Capacity Than Thought

A Bank of England official on Thursday said the U.K. economy may have less room to grow without stoking inflation than previously thought, underscoring divisions among policy makers over a critical judgment the central bank must make when choosing when to raise interest rates.

Martin Weale, one of nine rate-setters on the BOE’s Monetary Policy Committee, said in a speech that an analysis of recent trends in the labor market suggests the amount of slack in the economy might be closer to 0.9% of annual output than the 1% to 1.5% the MPC estimated in February. Spare capacity, through joblessness or idling factories, tends to keep a lid on inflation.

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